The IRS is granting insurance subsidies to taxpayers in the states that opted-out and they are enforcing penalties even though Obamacare does not allow it. This puts employers in a worse financial position than if their states opted-in.

The federal government is allowed to set up its own healthcare exchange in states that opted out but there is no provision in the law for them to set up subsidies or enforce the penalties. The IRS has ignored the letter of the law and is enforcing all of its provisions in all states, even those with federal marketplaces. It has rewritten Obamacare law though that right is reserved for Congress.

As a result, the states opting-out are now subject to subsidies which trigger fines and restrictions that determine who has to comply with the individual and employer mandates.

Obamacare, in other words, is illegally enforcing parts of Obamacare in opt-out states that it is not allowed to by law, forcing millions of taxpayers and small employers to pay fines if they don’t go along with this illegal interpretation of the law.

The government for their part says their interpretation and extension of the law is reasonable and is what was intended by Congress.

The federal government can only set up subsidies for policies bought in an exchange established by the state. It can establish its own exchange in opt-out states but according to the letter of the law, the federal government is not allowed to offer subsidies and the IRS is not allowed to incur penalties.

The IRS cannot rewrite the law that Congress has passed.

Without the subsidies in 36 states, the entire Obamacare system could fall.

The following video gives a brief rundown. Judicial Watch has several lawsuits on the HHS mandate in addition:

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